Tangible Benefits of Information Systems

by Jackie Lohrey; Updated September 26, 2017
Cash register.

Transitioning from using paper and pencils or a variety of standalone computer programs to an integrated information system is a sure sign of small-business growth. Unlike a disjointed manual system, a technology-based system handles all aspects of storing, processing, distributing and communicating business information from a central location. Although overriding goals often focus on intangible benefits such as gaining a competitive advantage or increasing customer satisfaction, many businesses also enjoy tangible benefits such as cost savings, improved control and fewer data-entry errors.

Defining Tangible

What you include in a tangible benefits list depends on whether you classify these benefits using a narrow or broad definition. If your company uses a narrow definition, tangible benefits are only those you can quantify and measure in monetary terms. These include both immediate cost reductions and long-term cost savings. A broad definition also includes quasi-tangible benefits that you can’t quantify in monetary terms, but that you can directly see, touch or feel.

Cost Saving Benefits

Although it often takes time to begin realizing cost saving benefits and expenses won’t shrink overnight, over time the financial benefits become more obvious. In addition, these benefits often occur in a sequence. For example, an information system increases productivity, which can lead to workforce reductions, which decreases your operational costs. It can also improve inventory-ordering efficiencies, which often reduce lead-time and results in both decreased inventory holding requirements and costs.

Better Internal Control

A number of tangible benefits work to improve preventive and detective internal controls. For example, a centralized information storage system allows for improved access controls. Faster reporting, which often translates to real-time feedback, increases accountability and reduces chances for abuse of business assets, fraud or internal theft. In addition, automatic tracking not only makes searching for current and historic documents easier, but also allows you to construct and review complete audit trails for most any transaction.

Increased Revenue

An information system can improve response time and increase sales revenues. Tangible benefits such as improved data availability and fewer information bottlenecks in the inventory management portion of an information system can help increase sales by reducing stock-outs and back orders. In the customer-relationship management portion, easier access to a customer’s information can mean the difference between making and not making a sale. It also allows sales and customer service people to monitor a customer’s order history and schedule timely sales calls.

About the Author

Based in Green Bay, Wisc., Jackie Lohrey has been writing professionally since 2009. In addition to writing web content and training manuals for small business clients and nonprofit organizations, including ERA Realtors and the Bay Area Humane Society, Lohrey also works as a finance data analyst for a global business outsourcing company.

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